Over the past five days, the Indian probity markets struggled to maintain their latter levels from the previous week. The whence of the week was on a steeply negative note; the pursuit four trading days without that were spent recouping from those lower levels. This ensured that, despite decent pullbacks, the NIFTY stayed within its range. The Tabulate witnessed a trading range of 745 points, wider than usual. However, despite that wide range, the headline tabulate ended veritably flat, with a negligible proceeds of 18.55 points ( 0.11%) on a weekly basis.
As we throne into the last five trading sessions of the year, it is important to note that the NIFTY is still unelevated the 20-Week MA, which presently stands at 17443. Beyond that, as per the weekly options data, the 17000 level continues to hold the highest PUT OI; this ways that the tabulate has support at these levels as of now. It would be crucial for NIFTY to pension its throne whilom this point to stave any weakness creeping in again. The most firsthand resistance for the markets has been dragged lower to 17500 levels; the zone of 17150-17440 has multiple resistance points that the markets may have to deal with on daily and weekly timeframe charts.
Volatility cooled lanugo a bit; INDIAVIX came off by 1.16% to 16.15. The coming week is likely to largely stay ranged; the overall volumes are moreover likely to stay modest, given the holiday season. NIFTY is likely to find resistance at the 17250 and 17400 levels. The supports are likely to come in at 16850 and 16700 levels. Just like the previous two weeks, the trading range over the coming week is moreover likely to stay wider than usual.
The weekly RSI is at 51.09; it shows a summery bullish divergence versus the price. The weekly MACD is surly and remains unelevated the signal line.
A bullish hammer emerged on the candles. The candle is like the one having a “long lower shadow” and not a classical hammer, as it has an upper shadow, it can still be classified as a hammer. The occurrence of such candles without a ripen and near support may hint at a potential reversal. However, we will need confirmation of this effect.
In the previous weekly technical note, I mentioned that moving past the 17000-17200 zone will be crucial for NIFTY. This holds true for the coming week as well. Moving past the 17000-17200 zone will ensure that the NIFTY ends its touching-up spell and enters the wholesale consolidation zone once again. So long as it is unelevated this zone, it theoretically stays vulnerable to profit-taking bouts. We will see traditionally defensive sectors like Consumption, Pharma and IT doing relatively largest over the coming days. It is recommended to pension purchases modest and limited to relatively stronger pockets over the coming week.
Sector Wringer for the Coming Week
In our squint at Relative Rotation Graphs®, we compared various sectors versus CNX500 (NIFTY 500 Index), which represents over 95% of the self-ruling bladder market cap of all the stocks listed.
The wringer of Relative Rotation Graphs (RRG) shows that Nifty PSUBank, Auto, Energy, Media and the Infrastructure Indexes are inside the leading quadrant. However, they towards to be slowing lanugo on their relative momentum. That said, these packs may protract relatively outperforming the broader NIFTY500 Index.
The NIFTY PSE Tabulate and the Realty Tabulate protract to slide while staying within the weakening quadrant. What is remarkable to see is the IT Index, which is showing strong rotation towards the leading quadrant while stuff placed inside the weakening quadrant. This reflects a sharp resurgence of relative momentum in the IT Tabulate versus the broader markets.
NIFTY Pharma rolls inside the improving quadrant; this marks a potential end to the relative underperformance of this sector. NIFTY Metal is inside the lagging quadrant, but it appears to be on the verge of rolling over to the improving quadrant. NIFTY Consumption, FMCG, the Services Sector Tabulate and the Commodities Tabulate are inside the lagging quadrant.
NIFTY Bank is inside the improving quadrant; the relative momentum here looks to be leveling off. Broadly speaking, we will see selective and isolated outperformance from these pockets.
Important Note: RRG™ charts show the relative strength and momentum for a group of stocks. In the whilom chart, they show relative performance versus NIFTY500 Tabulate (Broader Markets) and should not be used directly as buy or sell signals.
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
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Milan Vaishnav, CMT, MSTA is a qualified Independent Technical Research Analyst at his Research Firm, Gemstone Probity Research & Advisory Services in Vadodara, India. As a Consulting Technical Research Analyst and with his wits in the Indian Capital Markets of over 15 years, he has been delivering premium India-focused Independent Technical Research to the Clients. He presently contributes on a daily understructure to ET Markets and The Economic Times of India. He moreover authors one of the India’s most well-judged “Daily / Weekly Market Outlook” — A Daily / Weekly Newsletter, currently in its 15th year of publication.
Milan’s primary responsibilities include consulting in Portfolio/Funds Management and Advisory Services. His work moreover involves recommending these Clients with dynamic Investment and Trading Strategies wideness multiple asset-classes while keeping their activities aligned with the given mandate.